Today I want to talk about stress in trading and how to reduce it, because dealing with stress while you trade can be very difficult.
I am going to go over two methods you can use. Both are simple, and both lower your stress at the same time as improving how you trade.
Key takeaways
Cut your position size or your daily risk, because risking more than you can afford is where a lot of the pressure and stress comes from.
Before every trade, know exactly how much you are risking, whether that is an exact stop loss price or a zone where you slowly exit.
If a news event is coming, you can move your stop to match the volatility, but decrease your position size so your defined risk stays the same.
Use closed markets to improve your plan, so you know what to do in each scenario and walk in far less stressed.
Constant stress is not sustainable or profitable, and it goes against the freedom and flexibility you started trading for.
Method one: reduce your risk
When you reduce your risk, you reduce your stress at the same time. It is that direct.
Risking a significant amount, more than you can afford, brings a lot of pressure, and pressure leads to stress.
So reduce your position size or your daily risk. Anything that fits your strategy and lowers your risk will lower your stress along with it.
Method two: define your risk
Before you enter a trade, find out exactly how much you are risking. That is often set by where you place your stop loss.
It does not have to be an exact price. It can be a zone where you look to slowly exit, but you still need to know the number.
As Abu Zippips said last time, if you do not define your risk you are not really different from a gambler. So defining it lowers your stress and keeps you from gambling.
“If you do not define your risk, you are not really different from a gambler.”
Moving a stop the right way
Sometimes I am stuck in a trade for hours because price is not moving, and then a news event comes up that will cause a lot of volatility.
If my stop stays in the exact same spot it will get hit on that volatility. So I move it a little to match the move, and at the same time I decrease my position size.
That way my risk stays defined. Moving a stop for a valid reason you planned beforehand is fine. Moving it because you cannot accept the loss is a mistake.
Why stress is not worth it
Being in a stressed state is not sustainable, so most likely you will not reach profitability while you are in it.
Even if you do turn a profit, it is usually short term, and it is not worth it. Think about why you started trading in the first place.
You started for freedom and flexibility, to improve your life. Staying constantly stressed is counterintuitive and, honestly, not logical.
Lower your stress by trading with fair conditions and reliable payouts, which you can compare on Propvator.